The Opinion That Protects

The thesis

A fairness opinion is a financial adviser's letter stating that the price in a transaction is fair, from a financial point of view, to one of the parties. It protects those who decide, above all the board, but it is not a valuation, it is not a recommendation, and it loses value when the signatory has an interest in the outcome

What it is, and what it is not

A fairness opinion is a letter, accompanied by the analysis supporting it, in which the financial adviser states that the consideration in a transaction is fair, from a financial point of view, to the shareholders of one of the parties. It is a conclusion about a range of value, not a single number

It is not a full valuation of the company. It does not say that this is the best possible price, it does not recommend voting in favour and it expresses no view on the strategy of the transaction. It says only that the price falls within what is reasonable, under the stated assumptions

Whom it protects

The main beneficiary is whoever decides. Directors and officers who approve a transaction are bound by the duty of care, and an independent opinion on price is evidence that the decision was informed. It is the document showing that the board considered value before deciding

It also protects minority shareholders, insofar as it requires the decision to pass through a technical analysis of price, and not merely the will of the controlling shareholder

When the law requires a valuation

The Brazilian Corporations Law requires a valuation in specific situations.¹ Where a listed company acquires control of a commercial company, the proposal must be accompanied by a valuation report and approved by the shareholders' meeting, and above certain price thresholds it grants dissenting shareholders appraisal rights. In the merger of a controlled company, the justification must include the exchange ratios calculated on the basis of net assets at market value, for comparison

A fairness opinion goes beyond what the law requires. Even when not mandatory, it is recommended practice in related-party transactions, in take-privates and in any decision in which the board's judgement may be challenged

The problem of independence

An opinion is worth only as much as the independence of whoever signs it. If the adviser issuing the opinion is the same one earning a large fee only if the transaction closes, or financing one of the parties, the opinion carries its conflict. The experience of the Delaware courts has shown that opinions issued by conflicted advisers can expose the very board that relied on them.²

Good practice is therefore to separate those who negotiate from those who opine or, at a minimum, to pay a fixed fee for the opinion, independent of closing

The methodologies, and why they diverge

A fairness opinion typically combines three approaches. Discounted cash flow, which brings projected future cash to present value. Comparison with similar listed companies. And comparison with precedent transactions in the same sector, which already embed a control premium

The three rarely coincide, and the divergence is information. A very wide gap between them indicates that the conclusion rests on fragile assumptions. The chart overlaying the ranges from each method shows where the proposed price sits, and it is the exhibit the board should examine most closely

Who should engage the adviser

The opinion protects whoever commissions it independently. In related-party transactions, or where management has an interest in the outcome, the engagement should come from a committee of independent directors, not from management itself

The committee selects the adviser, defines the scope, receives the work directly and may challenge the assumptions. It is this chain of decision, and not merely the final document, that gives the opinion its protective value

What to read in a fairness opinion

The assumptions, before the conclusion. Which projections were used, and who prepared them. Which methodologies, and whether they converge or diverge widely. How far the conclusion depends on a single assumption, such as the discount rate or long-term growth. And what the adviser's relationship is with the parties

An opinion that does not disclose these choices protects no one

Tiago H. dos Santos, partner in charge, Revenaz Assessoria, September 2026